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Strategies For Achieving Advantage
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Strategies For Achieving Advantage

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  • 1. Dr. Panos M.Pavlidis Strategies for Achieving Advantage POSITIONS SOURCES PERFORMANCE
  • 2. Strategic Choices How can we gain new advantages?
    • Do we have an advantage? Why?
      • Target market?
      • Core value proposition?
      • Sources of advantage?
    • How vulnerable is our position?
      • Threat of imitation?
      • Threat of disruption?
    STRATEGY = Integrated actions designed to achieve superior delivery of customer value
  • 3. Achieving Superior Performance Positions of Advantage
    • Best performance
    • Best price
    • Most complete solution
    Sources of Advantage
    • Superior capabilities
    • Superior assets
    • Superior controls
    Performance Outcomes
    • Satisfaction
    • Retention
    • Share
    • Profitability
    Key Success Factors Objectives for Growth and Profit Investing to Sustain Advantages
  • 4. How Vanguard Gains a Competitive Advantage Positional Advantages Tight Cost Control Efficient Investment Approach Broad Array of Funds Direct Distribution Consistent Communi- cation Low rate of trading Bonuses tied to cost saving Frugal policies Index funds Discourage trading Wary of risky categories Education about risk Rely on word-of-mouth Clear buy-and-hold policy No retail outlets On-line access Negligible advertising No commissions to brokers Sources
    • Lowest costs (expense ratio of 0.3% vs. 1.2% for competition)
    • Superior performance (Index Fund beat 86% of all stock funds)
    • Responsive service
    • Diversity of offerings
    • Credible information
  • 5. Customer's Views of Value Leaders Operational Excellence Performance Leadership Customer Responsiveness "A great deal" "Best price" "Trouble free basic service" "Always at cutting edge" "High price but worth it" "Constantly renewing and creative" "Really understand my business" "Exactly what I need" “ Close business partner"
  • 6. Comparing Value Strategies Thrust of strategy Organization Core processes Economic driver
    • Operational
    • Excellence
      • Lowest delivered cost
      • Reliability/efficiency
      • Top down – employees more directed than enabled
      • Flat structure
      • Standardized
        • logistics
        • manufacturing
        • fulfillment
      • Scale
    • Customer
    • Responsiveness
      • Personalization
      • Complete solution
      • Infomediary
      • Front-line autonomy
      • “ Have it your way” mindset
      • Decisions based on fine-grained information
      • Modular operations
      • Integrated view of customer (CRM)
      • Service
      • Scope
    • Performance
    • Superiority
      • Innovative features
      • Greater functionality
      • Decentralized
      • Team-oriented/ loose-knit
      • Experimentation
      • Market sensing
      • Product development
      • Speed
  • 7. Assessing Advantage: What does our target market want?
    • Who are our real customers?
    • How well do we know the decision-making unit?
      • Owners
      • Influencers
      • Implementers
    • What values are they seeking = which attributes are perceived as important?
    • What segment differences?
  • 8. Assessing Advantage: What is our current position?
    • Location on the value map?
    • Value = perceived benefits – perceived total
    • (life cycle) costs
    • How do we compare to the competition on each attribute?
    • Where do we fall short? Why?
  • 9. Value Mapping for Copiers Total Costs
    • Price
    • Service
    • Supplies
    • Inventory
    • Administration
    Total Benefits
    • Product
    • customization
    • time in production
    • Service
    • technical support
    • responsiveness
    • quality
    • reliability (up-time)
    Worse Value Superior Value Parity Fair-value line Parity
  • 10. Value Mapping - Kodak Copiers Target Segment: Desk Top Publishers Target Competitor: Xerox Competitive Position Net Position Benefits Relative Importance Behind Equal Ahead 1. Product Customization .18 .18 +.18 2. Time in Production .18 .06 .12 -.06 3. Finished Quality .12 .12 0 4. Reliability .12 .02 .08 .02 0 5. Technical Support .15 .10 .05 +.05 6. Responsiveness to Problems .15 .03 .10 .02 -.01 7. Reputation (brand equity) .10 .08 .02 +.02 Net position +.18
  • 11. Making Strategic Choices
    • Premises:
    • Superior profitability requires
      • superiority on one value vector
      • parity on other two vectors
    • Choice of value vector dictates
      • choice of market segment
      • choice of business model
    • Parity is a moving target
      • best practices competition
      • rising customer expectations
    • Importance of each vector varies with
      • industry type
      • maturity of market/time
  • 12. Evolving Strategic Choices Introduction Growth Maturity Segment C Segment B Segment A
    • Leader
    t 1 t 2 t 1 t 2 t 1 t 2
  • 13. How First Direct Gained Advantage over High Street Banks Ability to retain and attract best people Business model Low employee turnover + Positive attitude High productivity Culture Service delivery capability Customer relating capability Location Selection Training Grouping Flexible hours Lower operating costs CRM systems Data- bases Customer understanding and selection Superior profitability Lower marketing costs High customer satisfaction and retention No branches 24 x 7
    • Superior
    • customer value
    • Service quality
    • Personalized
    • Lower prices